Rockwood Cas. Ins. Co. v. UNINSURED EMPLOYERS'FUND

Decision Date08 February 2005
Docket NumberNo. 34,34
Citation385 Md. 99,867 A.2d 1026
PartiesROCKWOOD CASUALTY INSURANCE CO. v. UNINSURED EMPLOYERS' FUND.
CourtMaryland Court of Appeals

867 A.2d 1026
385 Md. 99

ROCKWOOD CASUALTY INSURANCE CO.
v.
UNINSURED EMPLOYERS' FUND

No. 34, September Term, 2004.

Court of Appeals of Maryland.

February 8, 2005.


867 A.2d 1028
Kenneth G. Macleay (Rollins, Smalkin, Richards and Mackie, on brief), Baltimore, for petitioner

James W. Himes, Asst. Atty. Gen. (J. Joseph Curran, Jr., Atty. Gen., Kimberly Smith Ward, Asst. Atty. Gen., on brief), for respondent.

Argued before BELL, C.J., RAKER, WILNER, CATHELL, HARRELL, BATTAGLIA and GREENE, JJ.

GREENE, J.

Rockwood Casualty Insurance Company ("Rockwood") issued a workers' compensation policy to the Carousel Hotel ("Carousel") in October of 1997. Thereafter, Carousel failed to pay the premiums, prompting Rockwood to mail a Notice of Cancellation ("notice") to Carousel on December 20, 1997. On March 7, 1998, one of Carousel's employees sustained a work-related injury. The employee filed a claim with the Workers' Compensation Commission ("Commission") and impled

867 A.2d 1029
the Uninsured Employers' Fund ("UEF"). The Commission found the employee's claim legitimate and concluded that Rockwood should pay

The issue before this Court is whether the notice mailed by Rockwood to Carousel complied with the statutory requirements found in Md.Code (1997, 2002 Repl.Vol.), § 19-406 of the Insurance Article Within that issue reside two questions: (1) Does the statute require actual notice or is service complete upon mailing, and (2) If the employer is a corporation or partnership, does the statute require the insurer to give notice to an agent or officer of the corporation or to a partner, or is notice addressed to the entity sufficient?

We hold that the notice mailed in this case did not comply with the statutory requirements and that, therefore, Rockwood's attempt to cancel Carousel's insurance failed.

FACTS

In October of 1997, Rockwood issued a workers' compensation insurance policy to Carousel with coverage from December 23, 1997, through December 23, 1998.1 On December 30, 1997, Rockwood sent a Notice of Cancellation to Carousel by certified mail, cancelling the policy for failure to pay premiums, effective February 2, 1998. The notice was addressed simply to the "Carousel Hotel, 11700 Costal Highway, Ocean City, Md. 21842." Rockwood also mailed a copy of the notice to Carousel's insurance agent in Willards, Md. 21878. Both parties agree that the post office failed to produce evidence that the notice had been picked up or delivered to Carousel. The "Mail Loss/Rifling Report" of the USPS notes "no record of delivery." In addition, the certified mail return receipt, dated July 1998, states "no record of delivery." On February 27, 1998, Rockwood conducted an insurance cancellation audit of Carousel's records at the hotel.

On March 7, 1998, Genora Hodge, a Carousel employee, sustained a work-related injury, prompting her to file a workers' compensation claim. Rockwood argued that Carousel was uninsured because Rockwood had sent a proper notice, cancelling the insurance before the injury occurred. As a result, the employee asserted a claim against the UEF. The Commission found that the employee had sustained a compensable injury and that Rockwood was responsible to pay. The Commission determined that Rockwood had issued a workers' compensation policy to Carousel and that Rockwood's notice did not comply with the statutory requirements. Consequently, Rockwood had not successfully cancelled Carousel's insurance before the injury to Ms. Hodge occurred.

Rockwood sought judicial review in the Circuit Court for Worcester County. Both Rockwood and UEF filed motions for summary judgment on the question of whether Rockwood's notice was effective. On January 6, 2003, the Circuit Court for Worcester County, Judge Eschenburg presiding, granted UEF's motion, affirming the Commission. Rockwood appealed and the Court of Special Appeals affirmed in an unreported opinion. We granted certiorari. Rockwood Casualty v. Hodge, 381 Md. 674, 851 A.2d 594 (2004).2

STANDARD OF REVIEW

Under Md. Rule 2-501(e), summary judgment may be granted if "the

867 A.2d 1030
motion and response show that there is no genuine dispute as to any material fact and that the party in whose favor judgment is entered is entitled to judgment as a matter of law." When making a summary judgment decision, the trial court must not determine any disputed facts. Rather, considering the undisputed material facts, the court must decide if the moving party is entitled to judgment as a matter of law. Williams v. Mayor & City Council of Baltimore, 359 Md. 101, 114, 753 A.2d 41, 48 (2000) (internal citations omitted). We review the grant of summary judgment de novo. Walk v. Hartford Cas. Ins. Co., 382 Md. 1, 14, 852 A.2d 98, 105 (2004). Whether the circuit court properly granted summary judgment is a question of law. Id. We must decide if the trial court's decision was legally correct. Id.

In making that decision, we must independently review the record to determine if a genuine dispute of material fact exists. Id. We only proceed to the question of law if there is no genuine dispute of fact. Jurgensen v. New Phoenix Atlantic Condominium, 380 Md. 106, 114, 843 A.2d 865, 869 (2004). "In so doing, we construe the facts properly before the court, and any reasonable inferences that may be drawn from them, in the light most favorable to the non-moving party." Id.

DISCUSSION

Rockwood argues § 19-406 of the Insurance Article does not require actual notice. Moreover, Rockwood argues that § 19-406 gives the insurer the option, but does not require the insurer, to provide notice of cancellation to an agent or officer of an employer that is a corporation or to a partner if the employer is a partnership. By contrast, the UEF argues that the statute requires actual notice and requires the insurer to notify appropriate officials of corporate or partnership employers. The Court of Special Appeals held that the statute required Rockwood to send the notice by registered mail, or to prove actual notice in some other way. The Court of Special Appeals also held that Rockwood should have provided the notice to an agent or officer of Carousel Hotel.

The 1997 version3 of § 19-406 provided, in pertinent part:

(a) General requirements. — An insurer may not cancel a workers' compensation insurance policy before its expiration unless, at least 30 days before the date of cancellation, the insurer:
(1) serves on the employer, by personal service or registered mail addressed to the last known address of the employer, a notice of intention to cancel the policy; and
(2) files a copy of the notice with the State Workers' Compensation Commission.
(b) Notice to corporations and partnerships. — Notice under this section may be given:
(1) if the employer is a corporation, to an agent or officer of the corporation on whom legal process may be served; and
(2) if the employer is a partnership, to a partner.

Md.Code (1997), §§ 19-406(a), 19-406(b) of the Insurance Article. In addition, Article 1 section 20 states in pertinent part:

The term "registered mail" when used (1) in any section of this Code or of any code of public local laws ... includes and may be applied as the term "certified mail." Both terms mean the uses, procedures, and fees provided and generally referred to by the United States
867 A.2d 1031
Post Office Department. A provision in any such law, charter, resolution, ordinance, rule, regulation, or directive, for the use of one type of such mail, may be interpreted and applied to authorize the use of the other type of such mail as an alternate.

Md.Code (1957, 2001 Repl.Vol.), Art. 1 § 20.4

As noted by this Court in Oaks v. Connors, 339 Md. 24, 35, 660 A.2d 423, 429 (1995):

The cardinal rule of statutory interpretation is to ascertain and effectuate the intention of the legislature. Fish Market v. G.A.A., 337 Md. 1, 8, 650 A.2d 705 (1994). See also Jones v. State, 336 Md. 255, 260, 647 A.2d 1204 (1994); Parrison v. State, 335 Md. 554, 559, 644 A.2d 537 (1994); Rose v. Fox Pool, 335 Md. 351, 358, 643 A.2d 906 (1994). The first step in determining legislative intent is to look at the statutory language and "[i]f the words of the statute, construed according to their common and everyday meaning, are clear and unambiguous and express a plain meaning, we will give effect to the statute as it is written." Jones, supra, 336 Md. at 261, 647 A.2d 1204. See also Parrison, supra, 335 Md. at 559, 644 A.2d 537; Rose, supra, 335 Md. at 359, 643 A.2d 906; Outmezguine v. State, 335 Md. 20, 41, 641 A.2d 870 (1994).

See also Greco v. State, 347 Md. 423, 429, 701 A.2d 419, 422 (1997) (noting that our goal is to give statutes their "most reasonable interpretation, in accord with logic and common sense, and to avoid a construction not otherwise evident by the words actually used"); Frost v. State, 336 Md. 125, 137, 647 A.2d 106, 112 (1994) (stating that we will seek to avoid statutory constructions that are "illogical, unreasonable, or inconsistent with common sense").

In view of the plain language of Article 1 section 20, we hold that serving the notice by certified instead of registered mail was acceptable, even though the 1997 statute said registered mail. We do not agree, however, that simply mailing the notice, whether or not it arrived, was sufficient. The language of the statute implies otherwise.

Section 19-406 of the Insurance Article requires the insurer to serve the employer with notice and gives the insurer two ways to accomplish service: personal service or service by certified mail.5 To

867 A.2d 1032
"serve" is defined as, "[t]o make legal delivery of (a notice or process)... [t]o present (a person) with a notice or process as required by law...." Black's Law Dictionary 1399 (8th ed.2004). The term implies actual receipt. If the Legislature intended some lesser standard, it could have just required the insurer to send or mail the notice to the employer by regular mail. Instead, it...

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